Congressman Dan Burton did a question and answer session with 300 employees of Sallie Mae in Fishers this afternoon.  He addressed them in response to President Obama’s budget, which just passed the House, and includes language that proposes changing the student loan program which, depending upon the details of the plan, could threaten the jobs at Sallie Mae’s Fishers office and more than 2,300 Sallie Mae jobs across the state.

The Congressman encouraged them by saying he was a firm believer in that the private sector can do a better job in dealing in the area of student loans than the government does citing inefficiency in government controlled entities.  He ended his opening remarks, which didn’t last for more than a few minutes before devoting the rest of the time to Q&A, by saying that he will do everything in his power that he can to make sure that the student loan program remains with Sallie Mae as a main participant.

Just for a little background into all of this, student loan providers who participate in the Family Federal Education Loan (FFEL) program are worried that a single federal system that services everyone will not be able to meet student lending needs.

(Read more after the leap)

It introduces new operational risks. It requires a wholesale transition whereby the Department of Education is solely responsible for a loan delivery system valued in the billions of dollars annually. The whole loan origination and delivery system could run aground.

80% of schools who have chosen to rely on private sector loan origination services would be forced to convert to the Direct Loan (DL), or government operated system. This eliminates consumer choice and competition in loan delivery and support. Market-driven competition sparks innovation, produces cost savings, and enhances customer service.

Schools will face transition burdens and borrowers will be deprived of value-added services like financial literacy tools, default prevention programs, and proven customer service.

What does this mean for Sallie Mae and it’s thousands of employees in Indiana? The real possibility of dismantling the existing infrastructure and the thousands of jobs associated with it.

At the conclusion of his meeting, Burton responded to his meeting with Sallie Mae employees by saying:

“Jobs are just about everything to my constituents. In this very tough economy, the Obama administration is trying to expand government control to the point where they are going to suck the wind out of the private sector in central Indiana. The employees I spoke with at Sallie Mae today are staring that reality in the face, and I came here to let them know that I’m supportive of them and their company.

“Sallie Mae has an extremely important role in higher education, and, in the long run, direct lending from the Federal government will be less efficient, more costly, and their service will pale in comparison to what Sallie Mae offers students today. Above all, a transition to government control of student loans will cost Sallie Mae thousands of jobs. I think that is wrong, and I will do everything possible to make sure the Federal government does not replace Sallie Mae.”